Fiscal Commission Preliminary Proposals Revealed

By Kelly Thomas - Posted on 10 November 2010

Link from CNN. No wonder Congress was happy to pass the buck and allow a non-partisan fiscal commission to do their dirty work. Who would want this job? Expect criticsm from all sides. The GOP won't like the defense cuts. The Democrats will be furious that Social Security is on the table. Let's face it-reducing our debt will be painful and far from popular. But does that mean we should abandon all efforts? I think we can all agree that we will need to both cut programs and raise taxes if we are ever to seriously conquer our debt issues. I'm not saying I agree with many of these proposals, but I do favor the existence of this commission because we just can't trust Congress to touch any of these serious issues on their own. But does this commission really have any power? Will Congress actually agree to any these recommendations? What are the next steps? I'm interested in your assessment of this report and whether you think any of this will really move forward. Do you have better suggestions to save or raise money?

NEW YORK (CNNMoney.com) -- In a surprise move Wednesday, the
co-chairmen of President Obama's fiscal commission released their
preliminary proposals to curb growth in U.S. debt.

The report
from Erskine Bowles and Alan Simpson recommends spending cuts beginning
in 2012, as well as tax reform and other ways to reduce the deficit by
$4 trillion over the next decade.

Three
quarters of the $4 trillion would be achieved through spending cuts --
including defense -- and the rest from more tax revenue.

Among the
proposed defense cuts: Freeze noncombat military pay at 2011 levels for
three years to save $9.2 billion and reduce overseas bases by one-third
to save $8.5 billion. It would also direct $28 billion in cuts already
proposed by Defense Secretary Robert Gates toward deficit reduction.

The 18-member commission, which will make formal
recommendations to Obama on Dec. 1, has been closely watched by budget
experts since its first meeting in April.

The panel's proposals
are not likely to be adopted by Congress wholesale, but they are
expected to influence the debate in coming months as Congress tackles
the nation's unsustainable long-term debt.

In their report, Bowles and Simpson offer ideas for consideration by the commission:

Set targets for revenue and spending:
The report recommends that taxes be capped at 21% of gross domestic
product. It would also limit federal spending initially to 22% of the
economy and eventually to 21%.

Reform tax code:
The report would lower income tax rates and simplify the tax code. It
would abolish the Alternative Minimum Tax -- the so-called wealth tax --
and reduce tax breaks.

Change Social Security: The report
aims to make Social Security solvent over 75 years through a number of
measures, including smaller benefits for wealthier recipients, a less
generous cost-of-living adjustment for benefits, and a very slow rise in
the retirement age (from 67 to 68 by 2050; rising to 69 by 2075). It
also would expand over 40 years the amount of workers' income subject to
the payroll tax.

"America
cannot be great if we go broke," wrote Bowles, former White House chief
of staff under President Clinton, and Simpson, a former Republican
senator from Wyoming.

The full panel will vote on the recommendations by Dec. 1, the date of the commission's last public meeting.

Most
observers and commission members -- including 12 sitting lawmakers --
have been pessimistic that the panel will be able to generate the 14 of
18 votes needed to make any official recommendation to Congress, which
would put it up for a vote.

'This is just the beginning'

The
White House said Wednesday that Obama would not comment until the
commission finishes its work in several weeks, calling the report "a
step in the process."

0:00/2:16Deficit plan is in the details

The
commission met Wednesday morning to discuss the Bowles-Simpson report.
Initial public reaction from members ranged from guardedly positive to
negative.

"This is not the conclusion of the commission's work.
This is the beginning," said Senate Budget Chairman Kent Conrad, a
Democrat from North Dakota, who nevertheless commended Bowles and
Simpson for putting together a "serious proposal."

Fellow
commission member Judd Gregg, the top Republican on the Senate Budget
Committee who co-authored a bipartisan tax reform proposal cited in the
draft, characterized the report as an "aggressive and comprehensive plan
... I look forward to reviewing it in depth and hopefully improving on
it." (Bowles: 'Headed for disaster' - Video)

Other members were more blunt.

"This is not the way to do it," said Rep. Jan Schakowsky, a Democrat from Illinois.

Senate
Finance Committee Chairman Max Baucus, a Democrat from Montana, says he
has "significant concerns" with the proposal and "can't support it
now."

Meanwhile, Maya MacGuineas, who runs the nonpartisan Committee for a Responsible Federal Budget, called the report "remarkable."

"In a period when there has been little good news on the deficit and debt front, this is truly a most encouraging sign."

I think the tea party is about to find out that getting serious about the debt really means, The government getting their hands on their "damn medicare" as they used to like to scream at the town hall meetings over the summer as well as their social security.

"Peace Cannot be kept by force. It can only be achieved by understanding."

Sen. Tom Coburn (R-OK):Tea Party-backed ultra-conservative Coburn used the op-ed pages of The Washington Examiner last weeks to praise Paul’s “courage” in calling for a smaller military budget and said he looks forward to “working with him” toward that goal. “Republicans should resist pressure to take all defense spending off the table. … Taking defense spending off the table is indefensible. We need to protect our nation, not the Pentagon’s sacred cows,” he concluded.

Most encouraging plan they say? The Obama administration's deficit and debt commission released its statement lately. The deficit commission statement outlines systemic tax and spending revisions but why is the Congress reluctant to recognize it? Perhaps they neglect such occassions when it is about money.